We have already seen how well home-sharing facilities and extended hotels have been doing since summer 2020. Now that we are gradually recovering from the pandemic, has luxury travel come back yet?
People want to travel again in 2022
Unlike 2020 or 2021, where almost half of the consumers had canceled or postponed their vacations, only 5.5% may push their plans to a later date, and less than 4% want to cancel this year (Jacob, 2022). People are ready to hit the road again. Moreover, many people want longer trips and will book them early. Some luxury vacations are already fully booked this year.
Luxury vacations are trending now
Not everyone lost jobs or struggled during the pandemic. Those who accumulated more wealth in the last two years are now longing to spend more money on experiences with their loved ones, driving up the demands for private villas, private jets, private tours, and luxury vacations.
For example, the Mediterranean is traditionally a popular destination for private yachts. Some companies have already seen 80% of their charters to Spain being booked in the summer. Within the States, selected luxury ranches in Montana and Wyoming are also fully booked until February 2023 (Jacob, 2022).
Rate increase in luxury hotels can beat the inflation
According to a recent CBRE forecast (CBRE Hotels, 2022), the US lodging market is expected to see a rate recovery in 2022 and a full RevPAR (revenue per available room) recovery in 2023 compared to the pre-pandemic 2019 levels. Most likely, only luxury hotels have the leverage to exercise rate increases that exceed the pace of inflation.
Last year, my students conducted a market analysis of Orange County, California. We found that the rates in the market’s luxury chain hotels were already three times higher than the upper-upscale hotels and nine times higher than the economy chain hotels.
People are willing to pay a lot more for a luxury travel experience. Luxury travel is back already, although it might have arrived quietly.
Linchi Kwok, Ph.D.
Contributing Writer
linchikwok.net
References
CBRE Hotels. (2022, March 17). CBRE forecasts continued US hotel recovery in 2022 despite increasing risks.
HospitalityNet.org. Retrieved on March 20, 2022, via https://www.hospitalitynet.org/news/4109515.html
Jacob, C. (2022, March 18). The 4 types of vacations that may be hard to book in 2022. CNBC News. Retrieved on March 20, 2022, via https://www.cnbc.com/2022/03/18/the-4-types-of-vacations-that-may-be-hard-to-book-in-2022.html
Kwok, L. (2020, June 4). Will home-sharing and luxury hotels recover sooner after COVID-19? HospitalityNet.org.
Retrieved on March 20, 2022, via https://www.hospitalitynet.org/opinion/4099019.html
